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Helluva Good Top Pattern 9/13/21

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From the 2 hour bar perspective, Friday's breakdown completed a helluva top pattern. Now, at 5:30 AM NY time, they're fighting their way back. Here's the 2 hour bar look. 

tvc_0da9dfd492aa44ce1c1ae983dfd1752f.png

They're attacking resistance at 4480. If they get through that, the next target would be the resistance line at 4489. If they roll over instead, I think we'd be looking at 4450. 

Here's the hourly bars. 5 day cycle up phase seems to be starting. Doesn't rule out a test of the low or a minor new low, but odds favor some sideways or upward slop chop, rather than an extended breakdown in the short run. 

tvc_1a245113bb73ce44fbeb6d1b8fc489f5.png

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OK. It's 14:30 here and you know what that means. Time to take a walk, run some errands and do a little shopping.

This brings to mind the immortal words of General Douglas MacArthur. 

I shall return. 

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12 minutes ago, Mkucstars said:

They got it pumped up, I shoulda known better but now... can they hold it?

My views are that there is more down side on the way. another 2/3 days

When I see big gap down then all the downside is finished in SPX, around 4365?. If we don't get there in 3 days then will have to see what is happening.

FOMC may come out with Taper news.

IMHO that is double taper with huge Reverse repo running in trillions.

https://wolfstreet.com/2021/06/30/feds-reverse-repos-spike-to-1-trillion-cash-drain-undoes-8-months-of-qe/

posible bottom.png

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Only time this rule failed was after Mach 2020

1. Markets tend to return to the mean over time.

Translation: Trends that get overextended in one direction or another return to their long-term average. Even during a strong uptrend or strong downtrend, prices often move back (revert) to a long-term moving average. The chart below shows the S&P 500 over a 15-year period with a 52-week exponential moving average. The blue arrows show several reversions back to this moving average in both uptrends and downtrends. The indicator window shows the Percent Price Oscillator (1,52,1) reverting back to the zero line.

Chart 1  -  Bob Farrell 10 Rules

2. Excesses in one direction will lead to an opposite excess in the other direction.

Translation: Markets that overshoot on the upside will also overshoot on the downside, kind of like a pendulum. The further it swings to one side, the further it rebounds to the other side. The chart below shows the Nasdaq bubble in 1999 and the Percent Price Oscillator (52,1,1) moving above 40%. This means the Nasdaq was over 40% above its 52-week moving average and way overextended. This excess gave way to a similar excess when the Nasdaq plunged in 2000-2001 and the Percent Price Oscillator moved below -40%.

https://school.stockcharts.com/doku.php?id=overview:bob_farrell_10_rules

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54 minutes ago, jp6 said:

My views are that there is more down side on the way. another 2/3 days

When I see big gap down then all the downside is finished in SPX, around 4365?. If we don't get there in 3 days then will have to see what is happening.

FOMC may come out with Taper news.

IMHO that is double taper with huge Reverse repo running in trillions.

https://wolfstreet.com/2021/06/30/feds-reverse-repos-spike-to-1-trillion-cash-drain-undoes-8-months-of-qe/

posible bottom.png

How many times do I need to repeat this?

The idea that the RRPs are a Fed draining operation is utter, absolute horseshit.  

The RRPs are a slush fund that will fund the first couple months of QE tapering. It will begin to shrink as soon as the debt ceiling is lifted and the Treasury begins to issue T-bills again. 

RRPs are overnight money. Effectively the SAME as bank reserve accounts at the Fed. The holders of the RRPs can open them today and spend them tomorrow. In no way do they drain cash from the system. It's still ready cash, and it will be spent down when the Treasury starts issuing paper for the money market funds to buy again. The same paper it forced the funds out of when it redeemed those bills. 

This is not rocket science. It's the most basic accounting transaction.

The US Treasury reduced the supply of T-bills by a trillion, and sent the cash back to the money market funds (and others) that held the bills.

The MMFs put the cash into the Fed's RRPs because there was nowhere else to put it. The Treasury has continued to remove T-bills from the market right through last week. So they kept giving the holders their money back, and then these holders had nowhere to put it, other than the Fed's RRP program. The government MMFs in particular are mandated to hold safe short term paper. The Fed RRPs were their only option. 

Again, not rocket science. This is simple shit that even a simpleton like me can understand. 

If I can understand it, then so can you. 

And shame on Wolf for not seeming to grasp this. He is almost always right in his take on things. Here he's missed the boat. I'm surprised.  

https://wallstreetexaminer.com/2021/05/about-the-reverse-repo-rrp-crisis/

https://wallstreetexaminer.com/2021/05/where-does-homeless-money-go-to-fed-airbnb/

 

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5 hours ago, DrStool said:

They're attacking resistance at 4480. If they get through that, the next target would be the resistance line at 4489. If they roll over instead, I think we'd be looking at 4450. 

Uh huh. Yeah. Both. 

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2 hours ago, DrStool said:

How many times do I need to repeat this?

The idea that the RRPs are a Fed draining operation is utter, absolute horseshit.  

The RRPs are a slush fund that will fund the first couple months of QE tapering. It will begin to shrink as soon as the debt ceiling is lifted and the Treasury begins to issue T-bills again. 

RRPs are overnight money. Effectively the SAME as bank reserve accounts at the Fed. The holders of the RRPs can open them today and spend them tomorrow. In no way do they drain cash from the system. It's still ready cash, and it will be spent down when the Treasury starts issuing paper for the money market funds to buy again. The same paper it forced the funds out of when it redeemed those bills. 

This is not rocket science. It's the most basic accounting transaction.

The US Treasury reduced the supply of T-bills by a trillion, and sent the cash back to the money market funds (and others) that held the bills.

The MMFs put the cash into the Fed's RRPs because there was nowhere else to put it. The Treasury has continued to remove T-bills from the market right through last week. So they kept giving the holders their money back, and then these holders had nowhere to put it, other than the Fed's RRP program. The government MMFs in particular are mandated to hold safe short term paper. The Fed RRPs were their only option. 

Again, not rocket science. This is simple shit that even a simpleton like me can understand. 

If I can understand it, then so can you. 

And shame on Wolf for not seeming to grasp this. He is almost always right in his take on things. Here he's missed the boat. I'm surprised.  

https://wallstreetexaminer.com/2021/05/about-the-reverse-repo-rrp-crisis/

https://wallstreetexaminer.com/2021/05/where-does-homeless-money-go-to-fed-airbnb/

 

What is even more scary is the Fintwit experts who have 10's of thousands of followers, and many of these guys just regurgitate each other's opinion as expert analysis.

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